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By Shreyashi Sanyal and Amy Caren Daniel
(Reuters) – US stocks climbed on Monday as the S & P 500 and Nasdaq hit record highs as consumer spending rose in March and good inflationary data underscored the accommodative stance of the Federal Reserve on interest rates.
Hopes of a commercial resolution, optimistic profits and a dovish Fed fueled a rally of the benchmark this year. The index crossed for the first time this year its record of 2,940.91, reached on September 21, restoring investor confidence in the upward trend of the decade.
According to a Commerce Department report, consumer spending in the United States rose more and more in 9 and a half years in March, but price pressures remained subdued, a key measure of inflation posting its strongest impact. low annual gain in 14 months.
Controlled inflation could lead the central bank to cut interest rates, said Monday Larry Kudlow, economic adviser to the White House, in an interview on television.
"We are in an ideal situation where rates are low and the strength of the economy, and there is no possibility of rising rates, and it is an environment that characterizes the markets" said Paul Brigandi, managing director and head of trading operations for Direxion in New York.
"The strength of the consumer and the strength of the economy in general strengthen the dynamism of banks, as a strong consumer leads to greater credit activity."
Financials grew by 1.41%, the largest gain in the top 11 sectors of the S & P, while the banking sector grew 2.12%.
The US Federal Reserve begins Tuesday a two-day meeting after which a decision on interest rates will be announced.
In a new week of results, about 160 companies in the S & P 500, including Alphabet Inc. and Apple Inc., two companies related to Google, are expected to publish their quarterly results.
Analysts now expect S & P 500 earnings to decline only 0.2%, a sharp improvement from a 2% decline estimated at the beginning of the month, according to Refinitiv data.
As trade talks enter their final stage, US negotiators travel to China on Tuesday to try to find details to end the protracted tariff dispute between the two countries.
At 13:04 ET the Dow Jones Industrial Average increased by 34.32 points, or 0.13%, to 26,577.65. The S & P 500 was up 7.45 points, or 0.25%, to 2,947.33 and the Nasdaq Composite was up 21.29 points, or 0.26%, to 8,167.69.
Utilities and defensive real estate led declines in the seven largest S & P sectors trading in red.
Among the shares, Ingersoll-Rand jumped 5.93%, the largest number among S & P companies, after the Wall Street Journal announced that Gardner Denver Holdings Inc. was about to sign an agreement to acquire a unit of the air conditioner manufacturer.
Increasing issues outnumbered declining ones with a ratio of 2.01 to 1 on the NYSE and a ratio of 1.83 to 1 on the Nasdaq.
The S & P index posted 36 new highs over 52 weeks and no new lows, while the Nasdaq recorded 69 new highs and 19 new lows.
(Report by Shreyashi Sanyal and Amy Caren Daniel in Bengaluru, edited by Anil D & Silva and Arun Koyyur)
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